SCHORR et al. v. COUNTRYWIDE HOME LOANS, INC.
S10Q0193
SUPREME COURT OF GEORGIA
DECIDED JULY 12, 2010
697 SE2d 827
Judgment affirmed. All the Justices concur.
DECIDED JULY 12, 2010.
Carothers & Mitchell, Thomas M. Mitchell, for appellants.
Russell, Stell, Smith & Mattison, John E. Stell, Jr., for appellees.
S10Q0193. SCHORR et al. v. COUNTRYWIDE HOME LOANS, INC.
(697 SE2d 827)
CARLEY, Presiding Justice.
When Bradley and Lori Schorr (named plaintiffs) financed the purchase of their home in Georgia, they executed a security deed which was subsequently assigned to Countrywide Home Loans, Inc. Upon full repayment of the underlying loan in 2003, the named plaintiffs demanded in writing that Countrywide cancel the security deed pursuant to
to transmit properly a legally sufficient satisfaction or cancellation as provided in this Code section, the grantee or holder shall, upon written demand, be liable to the grantor for the sum of $500.00 as liquidated damages and, in addition thereto, for such additional sums for any loss cаused to the grantor plus reasonable attorney‘s fees. . . . [T]he grantee or holder shall not be liable to the grantor unless and until a written demand for the liquidated damages is made. No other provision of this Code section shall be construed so as to affect the obligation of the grantee or holder to pay the liquidated damages provided for in this subsection.
Former
Whether named plaintiffs in a class action may, pursuant to
OCGA § 44-14-3 , satisfy the pre-suit written demand requirement for liquidated damages on behalf of putative class action members by the named plaintiffs’ satisfaction of the written demand requirement.
See
The district court correctly noted that we have already determined that exhaustion of administrаtive remedies by named plaintiffs satisfies that pre-suit requirement for all class members. Barnes v. City of Atlanta, 281 Ga. 256, 257 (1) (637 SE2d 4) (2006) (Barnes II). The particular pre-litigation requirement involved in Barnes II was the demand for a tax refund contemplated by
does not “provide for the form of action to be utilized. By participating as a plaintiff in a class action that includes a claim for [liquidated damages], a [grantor of a security deed] is unquestionably bringing an action for [liquidated damages], which is what the statute permits.” [Cits.] Thus, any [such grantor] whom the named plaintiffs represent and who does not ultimately opt out of the class action is considered to have brought suit for [liquidated damages] at the same time as the named plaintiffs.
Barnes II, supra. As a result, the named plaintiffs in this case are generally permitted to act as representatives on behalf of the entire class of grantors. Barnes II, supra at 258 (1).
Just one example of such representative action, which Barnes II drew from persuasive authority, is satisfaction of the requirement for exhaustion of administrative remedies. The nature of that example, in light of the general aрproval of representative actions by named plaintiffs as discussed above, indicates that the satisfaction of any ” ‘precondition for suit . . . by the class plaintiff normally will avoid the necessity for each class member to satisfy this requirement
[m]ultiple [pre-suit] demands for relief need not be filed on behalf of all the members of the class. . . . [F]urther dеmands are not likely to serve any useful purpose and are not required. The modern class action is “designed to avoid, rather than encourage, unnecessary filing of repetitious papers and motions.” [Cits.]
Baldassari v. Public Finance Trust, 337 NE2d 701, 707 (5) (Mass. 1975). See also Duhe v. Texaco, 779 S2d 1070, 1087 (D) (La. App. 2001).
Barnes II does not indicate that a “key” factor that “drove” that decision “was the fact that this Court had previously determined in a prior appeal in that case that the City could not constitutionally collect the tax that had been imposed on the plaintiff attorneys. [Cit.]” (Dissent, p. 576.) Actually, the “most important” factor, as even the dissent acknowledges, was the defendant‘s need for early notice of its “potential” liability. Barnes II, supra. That notice was not provided by resolution of the substantive issue, but rather by satisfaction of the precondition for suit and by filing of the lawsuit itself. Barnes II, supra. We gave no indication in Barnes II that the prior substantive determination was even a minor factor in our decision.
Furthermore, contrary to the dissent, we did not causally connect that prior substantive determination to our ruling that recovery was not limited to those taxpayers who individually demanded a refund. (Dissent, p. 577.) Instead, we simply recognized that the applicable substantive law did not discriminate between those who individually satisfied the precondition for suit and those who did not. Barnes II, supra at 259 (1). Thus, it made sense that the named plaintiffs’ satisfaction of the precondition for suit and filing of thе actual lawsuit as a class action placed the defendant on notice of both the nature of the suit and the potential number of class members. Barnes II, supra at 258-259 (1).
Likewise, in the present case, the named plaintiffs’ written demand and filing of the lawsuit put Countrywide on notice of a class action which is governed by former
In short, there is no reason not to apply in this case the general rule allowing the named plaintiffs in a class action to satisfy preconditions for suit on behalf of the entire class. An exception to that general rule is not mandated by any ” ‘genuinely unique statutory requirements’ ” in former
Adoption of the dissent‘s position would convert a general rule applicable to class actions into an exceedingly narrow exception by means of an equally narrow reading of Barnes II. The general rule permitting pre-litigation representation of a class would be abrogated, leaving only a single exception to a newly adopted general rule in Georgia forbidding the satisfaction by a named plaintiff of a precondition for suit on behalf of a class. That extremely limited exception would apparently apply only when the particular precondition is exhaustion of administrative remedies, a constitutional challenge is involved and, most remarkably, the issue of liability to the class has already been determined. We decline to overturn a significant area of the law governing class actions in any such manner. Instead, we conclude that the certified question presented by the district court must be answered in the affirmative.
Certified question answered. All the Justices concur, except Melton, J., who dissents.
MELTON, Justice, dissenting.
Because I believe that a proper reading of the applicable law compels this Court to answer the certified question presented here in the negative, I must respectfully dissent from the majority‘s erroneous conclusion that the certified question here can be answered in the affirmative.
The record reveals that Bradley and Lori Schorr are the named plaintiffs in a class action suit against Countrywide Home Loans, Inc. Like all plaintiffs in the сase, the Schorrs financed their home with a loan from Countrywide. Once the Schorrs paid off the underlying loan in full, they demanded in writing that Countrywide cancel the security deed pursuant to the pre-2008 version of
Countrywide did not pay the liquidated damages, so, in February 2007, the Schorrs filed a class action lawsuit in the United States District Court for the Middle District of Georgia on behalf of the class of Countrywide customers whose security deeds had not been cancelled as required by the former version of
The analysis begins with this Court‘s decision in Barnes v. City of Atlanta, 281 Ga. 256 (637 SE2d 4) (2006) (”Barnes II“), which the majority contends is controlling in this case. In Barnes II, a class of attorneys sued the City of Atlanta for a refund of occupational taxes that the City had unconstitutionally collected from them. Prior to filing the lawsuit, however, some of the class members had exhausted their administrative remedies by filing a claim with the City for a tax refund as required by
Although
OCGA § 48-5-380 is applicable to [the suit of the class members who have not satisfied the prе-suit refund claim requirement], so too are those principles which apply generally in class actions, including that which permits a representative to act on behalf of an entire class. Where, as here, “exhaustion of administrative remedies is a precondition for suit, the satisfaction of this requirement by the class plaintiff normally will avoid the necessity for each class member to satisfy this requirement individually.” 2 Newberg on Class Actiоns § 5:15, p. 438 (4th ed. 2002).
Decisions to the contrary, such as U. S. Xpress v. State of New Mexico, 136 P3d 999 (N.M. 2006), are “based on genuinely unique statutory requirements.” 2 Newberg, supra at 440.
OCGA § 48-5-380 , unlike certain tax refund statutes, neither prohibits utilization of a class action, nor expressly requires individual exhaustion of administrative remedies. See Arizona Dept. of Revenue v. Dougherty, 29 P3d 862, 869 (B) (Ariz. 2001). CompareOCGA § 48-2-35 (c) (5) [(“An action for a refund pursuant to paragraph (4) of this subsection shall not be brought by the taxpayer on behalf of a class consisting of other taxpayers who are alleged to be similarly situated.“)].
Barnes II, supra, 281 Ga. at 257-258 (1).
The majority claims that, because here, former
We have already determined that the City unconstitutionally regulated the practice of law. Barnes I, supra at 450 (1). Such a determination does not discriminate between those who individually demanded a refund “and those who did not. The [City] unconstitutionally collected taxes from all of these individuals.” (Emphasis in original.) Bailey v. State of North Carolina, [500 SE2d 54, 73-75 (V) (N.C. 1998)]. Limiting recovery only to those taxpayers with the foresight to have demanded a refund is “untenable in a case such as this, where the matter is of constitutional import and where, in practical consequence, the purpose of the [ordinance] was realized.” Bailey v. State of North Carolina, supra.
Id. at 259 (1). Thus, as this Court made clear from its decision in Barnes I, there was no dispute in Barnes II that the plaintiffs involved in the case were entitled to receive a refund of the illegally collected tax. Indeеd, once this Court determined as a matter of law
the most important factor in applying the administrative exhaustion requirement to cases involving the constitutionality of taxes is the state or local government‘s need for early notice of its potential liability. In this case, when the administrative claims were filed by the named plaintiffs, and certainly by the time the lawsuit was filed thereafter, the City was aware of a constitutional challengе to the validity of its occupation tax ordinance, and should have been fully aware of the number of attorneys who paid the tax.
Barnes II, supra, 281 Ga. at 258 (1). Accordingly, because this Court had “already determined that the City unconstitutionally regulated the practice of law [by collecting the occupational tax,] Barnes I, supra at 450 (1)[,]” and because the City had already been given notice of, and had already litigated, the constitutional claim such thаt it was aware of its liability and the number of attorneys who had paid the unconstitutional tax, “[l]imiting recovery only to those taxpayers with the foresight to have demanded a refund [was] untenable . . . [particularly] where the matter [was] of constitutional import and where, in practical consequence, the purpose of the ordinance was realized.” (Citation and punctuation omitted.) Id. at 259 (1).3
Here, however, the same cannot bе said. Contrary to the majority‘s contentions, Barnes II does not support the proposition that the Schorrs may satisfy the liquidated damages demand requirement of former
In this connection, the plain language of former
DECIDED JULY 12, 2010.
Bondurant, Mixson & Elmore, Michael B. Terry, Frank M. Lowrey IV, Jason J. Carter, Charles A. Gower, Ben B. Philips, for appellants.
Hunton & Williams, Bryan A. Powell, Lawrence J. Bracken II, Jason M. Beach, for appellee.
King & Spalding, Dwight J. Davis, Barry Goheen, Jennifer D. Fease, amici curiae.
Notes
. . . .
(b)(1) Whenever the indebtedness secured by any instrument is paid in full, the grantee [i.e. the lender] or holder of the instrument, within 60 days of the date of the full payment, shall cause to be furnished to the clerk of the superior court of the county or counties in which the instrument is recorded a legally sufficient satisfaction or cancellation to authorize and direct the clerk or clerks to cancel the instrument of record. The grantee or holder shall further direct the clerk of the court to transmit to the grantor [i.e. the borrower] the original cancellation or satisfaction document at the grantor‘s last known address as shown on the records of the grantee or holder.
. . . .
(c) Upon the failure of the grantee or holder to transmit properly a legally sufficient satisfaction or cancellation as provided in this Code section, the grantee or holder shall, upon written demand, be liable to the grantor for the sum of $500.00 as liquidated damages and, in addition thereto, for such additional sums for any loss caused to the grantor plus reasonable attorney‘s fees. The grantee or holder shall not be liable to the grantor if he or she demonstrates reasonable inability to comply with subsection (b) of this Code section; and the grantee or holder shall not be liable to the grantor unless and until a written demand for the liquidated damages is made. No other provision of this Code section shall be construed so as to affect the obligation of the grantee or holder to pay the liquidated damages provided for in this subsection.
(Emphasis supplied).
[a]ny taxpayer [whо has filed a claim for a refund and] whose claim for refund is denied by the governing authority of the county or municipality or whose claim is not denied or approved by the governing authority within one year from the date of filing the claim shall have the right to bring an action for a refund in the superior court of the county in which the claim arises. No action or proceeding for the recovery of a refund shall be commenced befоre the expiration of one year from the date of filing the claim for refund unless the governing authority of the county or municipality renders a decision on the claim within the one-year period. No action or proceeding for the recovery of a refund shall be commenced after the expiration of one year from the date the claim is denied. . . .